Cboe Global Markets

The stable outlook reflects S&P Global Ratings' expectation that Cboe will sustain leverage below 1.75x. We expect the financial safeguards at EuroCCP will not weaken with the growth in the trading and clearing offering in European equity derivatives. We could lower the ratings if: Leverage exceeds 1.75x following a series of acquisitions or aggressive financial policies; or Financial safeguards at EuroCCP unexpectedly weaken. We could raise the ratings if Cboe keeps reducing its dependence on flagship products and transaction-based revenue, while financial safeguards at EuroCCP do not weaken. S&P Global economists forecast U.S. GDP will grow 1.6% in 2022 and 0.2% in 2023. While GDP does not affect trading volumes for financial market infrastructure firms (FMIs), we believe healthy growth

...Cboe Global Markets has a leading position among options exchanges in the U.S. It has a 99% market share in index equity options and an approximately 33% market share overall in the year to date through October (including single-name equity options). The company is more dependent than peers on volatile trading revenue. Transaction-related revenue represented about 68% of total revenue for Cboe in the first nine months of 2022--far above the levels for Nasdaq and ICE. Cboe operates with low leverage. Although leverage, as measured by S&P Global Ratings-adjusted debt to EBITDA, increased to 1.7x as of September 30, 2022 (from 1.4x at year-end 2021), following the partially debt-funded acquisitions of ErisX and NEO, we project leverage will be about 1.5x by the end of 2022. The company is home to three of the most widely recognized products traded and used globally: VIX futures, VIX options, and S&P 500 options. These three products represented 57% of total net transaction fees in the first...

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